All the major market indexes are trading close to new highs. This has pushed valuations well above historical norms. The current price-to-earnings (P/E) ratio for the S&P 500 is sitting around 30 -- almost double the historical average.
It is getting challenging to find reasonably priced growth stocks in 2025, but one sector that is turning up some good deals is retail. Here are two retail growth stocks billionaires were buying in the fourth quarter.
1. Coupang
Coupang (CPNG +0.51%) is South Korea's leading online retail company, and the company's strong growth and opportunities for international expansion are attracting the attention of two notable billionaires. Howard Marks of Oaktree Capital Management and Chase Coleman of Tiger Global Management were buying in the fourth quarter.
The stock rebounded last year following strong financial results. Excluding Coupang's recent acquisition of luxury goods marketplace Farfetch, revenue grew 20% year over year in the third quarter and 25% excluding currency changes.
NYSE: CPNG
Key Data Points
Coupang controls nearly 40% of South Korea's e-commerce market, according to Research and Markets -- a market expected to grow from $124 billion in 2023 to $182 billion by 2028. More people continue to discover Coupang. The active customer count reached 22.5 million last quarter, up 11% year over year.
One risk for Coupang is its dependency on South Korea. To deliver satisfactory returns to investors over the long term, it will have to prove its business model can work in other geographies, where it may run into more competition. So far, Coupang has expanded operations to Taiwan, Singapore, China, India, and Europe.
Coleman and Marks may see value in Coupang's unique delivery system, which can deliver packages within hours to customers living in densely populated cities, which other e-commerce companies may not be equipped to handle. Management has seen great progress so far in Taiwan, where the company is putting a lot of investment into growth in that market.
These investors wouldn't be buying the stock if they didn't see value. The stock's price-to-sales (P/S) multiple of 1.6 is lower than the average P/S range that Amazon traded at in its early years of growth. At this valuation, investors can expect the stock to follow the company's growth, and that should translate to excellent returns over time.
2. Skechers
Top footwear brand Skechers (SKX +0.00%) is growing earnings at double-digit rates, yet the stock trades at just 16 times earnings. In Q4, Andreas Halvorsen of Viking Global Investors bought a new position in the stock.
Skechers stock seems to be perennially undervalued by investors. Despite growing revenue at an annualized rate of 14% over the last 10 years, the stock has consistently traded at a price-to-earnings ratio under 20, which seems unjustified.
The company has built a solid footwear brand over the last few decades. Customers value style, comfort, and quality at affordable prices, which has been the hallmark of Skechers' brand. In the most recent quarter, sales grew 13% year over year, with earnings surging 26%.
NYSE: SKX
Key Data Points
The numbers clearly suggest that Skechers deserves a higher valuation. This is especially true as the company expands into performance footwear. It has signed several professional athletes across basketball, golf, and baseball, which could raise brand awareness.
However, the stock has fallen recently over the potential impact of U.S. tariffs on imports from China. The company makes its shoes in China and Vietnam, and this could impact its near-term earnings. The stock is down since its Q4 earnings report in January on lower-than-expected guidance. However, analysts still expect Skechers to report earnings growth of 16% in 2025.
Viking Global probably expects Skechers to successfully navigate tariffs by adjusting its supply chain, as it did before. Over the long term, investors should expect the stock to deliver returns on par with the company's earnings, and perhaps even better, if the P/E narrows the gap with the S&P 500 average.
